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The Genie and Three Trust Wishes

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I have a friend. My friend is a middle manager for a large, diversified multinational corporation, running a group of about 80. He swears to me the following happened.

I was on a flight to Singapore from New York. During the dark part of the flight, after meals, most people were sleeping. I was in a quiet meditative state. 

Suddenly, from out of the coffee pot on the flight attendant cart in front of me, came a bright puff of smoke. Then from the smoke, a genie emerged. He came over and sat next to me in the empty seat (I was in business class).

I said, ‘What’s this, a three-wishes kind of deal? What are my choices?’

The genie said to me, ‘Yes, that’s the general practice in my business. Now, you’re a manager. You know how important trust is—within your team, with your customers (both internal and external), with other units. Right?’

‘Of course,’ I said.

‘And you know that you can’t manage what you can’t measure, right?’

‘Right.’

‘And, I believe your company is extremely results-driven, am I right?’

‘You don’t know the half of it, genie. Yes, it most certainly is.’

‘Good,’ said the genie. ‘So here’s the deal.

‘Behind the first door—metaphorically speaking, of course—you can choose to have double the trust levels of any other business unit in your company. More trusted by customers, higher levels of intra-team trust, and so forth.’

‘Wow,’ I said, ‘that’d be great. Why wouldn’t I want that?’

‘Hear me out,’ said the genie. ‘The kicker is—you won’t be able to measure it. You won’t be able to build processes, or metrics; you won’t be able to prove to anyone that you are trust-rich, nor will you be able to identify specific actions or ‘tools’ to manage it. You’ll know it’s high, and others will anecdotally acknowledge it, but that’s it.’

‘Hmm,’ I said, ‘that’s not so great after all. Is there a door number two?’

‘Of course,’ said the genie. ‘Door number two is the opposite; you’ll only have half the level of trust that your firm has on average. But you’ll be able to measure it precisely; prove the dynamics to anyone; track it, analyze it, manage it, tweak it. You’ll just never get very good results over the long haul.’

‘Great,’ I said. ‘Is door number three going to give any relief?’

‘Maybe so,’ said the genie. And he showed me the following table:

Option 

A

B

C

D

Trust level

2.0

1.2

0.8

0.5

Management level

0.2

0.5

0.75

1.0

‘You can mix and match,’ he said. Options A and D I already told you about. Options B and C are in between. You can get a little more management of trust at the price of less trust. You can get a little more trust at the price of less ability to measure it.

‘So really,’ the genie smiled at me, ‘you got four choices today. Must be that Arabica coffee that makes me feel so generous.’

Then my friend told me which option he chose.

But what I want to know is: which option do you choose? Tell us below in comments what your choice is, and briefly why. Let’s get our own market research going here.

Top Trust Myths: 2 of 2: Trust is Destroyed in Moments

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Trust takes a long time to build, and only a few moments to be destroyed. 

In my last blogpost, I suggested this is one of the all time great trust platitudes, and that the first part of it was as often untrue as it is true. 

In this post, I want to tackle the second part: the idea that trust takes only a few moments to be destroyed.

Moments of Trust Destruction

Let’s start with how trust gets built up in the first place. It’s amazing how often we hear both of these contradictory statements—and accept them both as true:

Generally, we trust someone until we’re proven otherwise, starting most relationships with a certain level of trust and building from there.

and

Relationships don’t begin with trust. Trust must be built day-by-day…conversation by conversation.

Which is it? Do we start with high levels of trust? Or do we build it up slowly? The fact that you can understand both points of view is a tipoff; once again, it depends on what kind of trust you’re talking about.

I think when we say things like “trust can be lost in a moment,” we are mostly in the former territory – that is, situations where we grant trust early on as the default position. It might be early in a personal relationship, where one person says something unexpectedly inappropriate. It might be an institutional relationship, such as a “personalized” mass mailing which misspells our name.

I think cases of egregious corporate behavior typically fall into this category, e.g. when BP lost the rig in the Gulf. But one might ask — who exactly trusted BP before the accident? And precisely for what did they trust them?

These cases of trust being destroyed in a moment are more like an electrical short in a traffic light. In a moment, our trust in the dependability of that light is destroyed. But all we had trusted it to do was to maintain switching capability. Its failure is not a wound to the heart.

Sloooowww Trust Destruction

By contrast, let’s look at cases of “rich” trust – situations where we have evidence of credibility, reliability, intimacy-capability, and low self-orientation. What happens when such a relationship is faced with a violation?

What happens to a marriage when one spouse behaves adulterously?   What happens when a Bernie Madoff refuses to answer routine questions about investment behavior to a client? What happens when a parent is informed that their child has committed criminal behavior?

What usually does not happen in those cases is the total destruction of trust. Most spouses first cope with infidelity by denial–and a great many adulterers are ultimately forgiven. Massive numbers of people chose to deny the evidence of Madoff’s malfeasance, and parents routinely insist that “I know my child, and (s)he could not have done that.”

As swindle victim Bobby Lall put it, "People say, ‘Why would you trust somebody like that?’ But your friends are the ones you trust. Pretty much your friends and your family’s about all you’ve got in life."

These are situations of grave betrayal: being cheated on by a spouse hurts worse than finding a new fee charge hidden in the small print on your bank statement. Yet it’s the minor trust transgression that causes us to “lose trust in an instant.”

The real big betrayals? We hang on, and on, and on.   We don’t lose trust in an instant – we are bled dry, very slowly, twisting in the wind.

When Trust is Lost Slowly, When Quickly

As we say over and over in this blog, trust is a complex phenomenon. Trust measurement without context is misleading at best, meaningless at worst. Trust management without context is aimless. Trust platitudes without context dependent on the listener’s tacit intuition of the context.

The speed at which trust is lost is a second- or third-order metric. It is not even driven by the speed at which trust is created. It is more accurate to think of “thin” trust and “rich” trust.

If Amazon incorrectly bills me for a book I never ordered, my loss of trust is quick and thorough. But it was never very rich; I trusted a billing system, not a friend, a lover, or even my dog. I’m annoyed, not destroyed. That’s thin trust.

If I spot my daughter taking money from my wallet without having asked me, I am quick to question her and to be upset; but I do not revise my fundamental assessment of her – I might even still let her use my credit card, albeit not quite so unconsciously.

Dr. Eric Uslaner, a leading academic on the subject of trust, has this to say in an interview I did with him:

CHG: What’s the biggest misconception about trust that you find people have?

EMU: That trust is fragile, or that it can be reestablished easily. Moralistic (or generalized) trust is learned early in life, from your parents, and it remains stable for most people throughout their lives. So you can’t break trust easily.

Again, he’s talking about what he calls generalized, or moralistic, trust. So as usual, it depends.

As if to prove Uslaner’s point, here is the tale of Eric Taylor, an Englishman who was conned and hustled by a real pro on a visit to Washington DC. Not just conned, but double-conned, by someone who knew a trust-sucker when he saw one and was quick to double the ante.

Here’s what Eric Taylor learned from his encounter with the swindler:

When my wife and I were discussing the incident for the hundredth time a few weeks later, she said: "And, if it happened again, I know you would react in exactly the same way, even knowing what you know now. And I would rather you were that way than the other."

Trust lost in an instant? Myth busted. It depends.

Top Trust Myths: 1 of 2: Trust Takes Time

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Trust takes a long time to build, and only a few moments to be destroyed.

That has to be one of the great trust platitudes. In fact, it literally is: there’s a website that ranks the most popular trust quotes, and essentially that quote is number 3 (numbers one and two are inexplicably complex).

Many truisms are in fact true; that’s how they came to be truisms. But some are not; and this is an example.

Trust Takes a Long Time to Build? Not necessarily, in fact frequently not. That’s what I want to talk about today.

Trust Takes Only a Few Moments to Be Destroyed? Even less true. That’s what I’ll talk about next.

Trust Takes Time: Not.

“At once my mind was made up. I knew I could trust this young man implicitly,” goes a tale of petty larceny from the web. Researchers tell us that the propensity to trust can be increased or decreased simply by chemicals; increased by Oxytocin, decreased by testosterone. Neither takes long to administer.

How about trustworthiness? Think about the symbolism that goes on when you enter your physician’s office: the white coat, the stethoscope, the faint odor of something (I always assume ether, which probably went out with Sherlock Holmes), the degree on the wall. How long does that take? Not long.

“I trusted him instantly,” says Emma-Jane Corser of her husband, whom she met online. She’s not alone. This is profoundly common human behavior; we all make split-second decisions based on a variety of factors, few of which boil down to the kind of analytically-based routine we like to think of ourselves as following.

Peter Tingling and Michael Brydon write incisively in Sloan Management Review about “evidence-based decision-making” and “decision-based evidence making.” Jeffrey Gitomer says, “People buy with their hearts, and rationalize it with their brains.” Trust is hardly the only kind of decision we make quickly.

What Kind of Trust Takes Time?

Of course, platitudes don’t achieve that status out of thin air. There’s usually something to them, and of course there’s something here too. In the Trust Equation, one of the factors is reliability (the others are credibility, intimacy, and an other-orientation). Reliability is the only factor that requires the passage of time to be evaluated.

Think of all the ways we link trustworthiness to time. She walks the talk. He does what he says he’ll do. She’s never let me down. He’s always been there for me. If she says she’ll do it, you can take it to the bank. And so forth.

Finally, there’s what the social scientists and trust academics call “generalized” trust—the propensity to believe well of the motives of strangers, and to be generally optimistic about the future. That one, it turns out, takes ages to turn around—negatively or positively. As Dr. Eric Uslaner points out, generalized trust is pretty much installed with mother’s milk.

So: does trust take time or not? Clearly, this is one of those cases where the right answer is, “it depends.” And what it depends on is the type of trust we’re talking about.

Does it take a long time to be seen as trustworthy? Let’s break it down:

Type of Trust Takes Time?

Trustworthiness

Credibility Not much

Reliability Yes, by definition

Intimacy Not necessarily; usually pretty clear pretty quickly

Other-focus Not necessarily; usually pretty clear pretty quickly

Propensity to trust

In institutions Shifts over a few years

In specific people Not much time

Generalized trust A long time—typically from birth

Next Post, Trust Myth #2: Trust is lost very quickly.

A Cautionary Tale for Marketers: Do’s and Don’t’s from the Perspective of the Marketed-To

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Story 1: Don’t Do This

I got one of those broadcast email solicitations from a very reputable organization that hosts executive roundtables. Brian (a stranger to me) wanted me to attend an informational meeting. To his credit, he “had me at hello” with the very first lines of his email, which were both personal and complimentary: “Andrea, let me first say I LOVE the name of your company and the genesis of it…the ‘new beat’ story. Outstanding!”

“Wow,” I thought, “He’s taken the time to find out about BossaNova and make a personal connection to me. He gets me! He likes me! I like this guy!”

What followed was a directive to “Read on” with a photo of a jubilant baseball team and the assertion that “There are lessons you learn in Baseball that can apply to business leaders like YOU once you understand their importance and their impact” (with a bulleted list of those very lessons). His call to action at the end of the email was aggressive and impersonal.

Brian had me right off the bat and lost me soon after. I have nothing against baseball—not at all. I’m just not much of a sports enthusiast and, truthfully, get tired of the male-oriented metaphors. Brian’s very personal appeal followed by his very impersonal (and misaligned) form letter was a particularly lethal combo. Now, not only am I a “no” for the information session I was invited to, but I have an attitude about both Brian and his organization to boot. Three strikes, you’re out.

Story 2: An Approach to Emulate

A few weeks ago I was surprised by a knock at the door—an unexpected delivery of baked goods from a local sweet shop. The package included a hand-written note from Kacy, the office organizer I had hired exactly one year before. The sweets were to commemorate my first anniversary in my new home office, with a reminder that she was available should any lingering piles be in my way, and a request to tell others about her services if I was so inclined.

I immediately logged onto Facebook (well, by “immediately” I mean right after I had a cookie) and posted kudos for Kacy, along with a link to her web site. I sent her an email to thank her for the unexpected treat, alert her to the free Facebook advertising, and acknowledge her for the lesson in great marketing. She wrote me right back to thank me, saying, “I’m so glad you like them! I never know if someone’s going to be out of town or unavailable, but it always works out. In my client list, I have a column where I note the dates of our last sessions. Once a month or so I run through those and send the goodies out!”

The sweets hit the sweet spot, for sure, far more so than being hit over the head with a baseball bat. Maybe Kacy got lucky with her choice. Although it seems to me she could have sent me anything (even one of those giant foam fingers) and the good feelings from the unexpected personal acknowledgement would have prevailed.

A Plea to Marketers

The two anecdotes aren’t apples to apples—different relationship histories, different communication media, different calls to action. That said, I find them both illuminating.

To all marketers out there (including myself), here’s my plea:

  •         DO make it personal
  •         DON’T use a personal tactic to get someone’s attention and then switch to a more generic approach
  •         DO find creative ways to appreciate the people who have given you business in the past
  •         DO use the element of surprise
  •         DON’T be afraid to ask for more work or for referrals.

The moral of the stories: Intimacy is a powerful tool in business. Use it wisely, especially with strangers. Mix it in with a little unexpected generosity and you’ll hit a home run.

Carnival of Trust for July, 2010

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Welcome to the July edition of the Carnival of Trust.

This month we are graciously hosted by the hardest working man in the compliance business, Doug Cornelius. Doug resides at compliancebuilding.com. He’s a Boston lawyer, with serious experience in real estate, private equity, knowledge management, and–of course–compliance and corporate ethics. He’s Chief Compliance Officer at Beacon Capital Partners, a real estate private equity firm, though the views expressed in his blog are his alone. Trust is a central subject matter for those in the compliance business, many of whom read Trust Matters. Doug is a consistently thoughtful observer of things trust-related, and I’m delighted to have him as host. The Carnival of Trust is a highly subjective listing of key blogposts related to trust. The choices are made by rotating hosts–Doug, in this case. They make the choices and write the commentary. This way you get a seasoned voice, other than mine, on the key subject of trust. Click on over to Doug Cornelius’ Compliancebuilding.com, and give a read of his selections and commentary this month. I assure you, you won’t be disappointed.

Upcoming Events 7/9/2010

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Whether it’s global warming or just a searing hot heat wave, this week has proven to be a hot one for those of us out here on the East Coast. Record temperatures aside, we’ve got bubbling items on our agenda and we hope you can join us for some. We’ve changed dates, included more details, and added events to our calendar below. Take a look!

——

Thurs. July 29th          Singapore          Trip Allen

Preview trust-based skills and techniques that allow you to forge quicker yet long-lasting relationships, so as to increase your overall business. Trip will be speaking on Trust Edge: Trust-based Selling & Business Development at Marketing Institute of Singapore (MIS). 6:00–9:00PM. Open to the public. Fees: MIS  Student/Member-$20; Partner-$35; Non-member-$35. Venue: MIS Executive Club (51 Anson Road, #03-53 Anson Centre, Singapore 079904). For more information, please take a look at the brochure.

Tues. Aug. 10th      Global Access          Sandy Styer

Sandy Styer, the head of the Trusted Advisor Diagnostics group, will present the findings of  the largest study on trustworthiness ever completed: the Trusted Advisor Whitepaper entitled "Think Again", and the implications for business This research covered over 12,000 respondents. FREE. 10:00AM EST. 30 minutes duration. Contact: [email protected] to register.

Sat. Sept. 18th      Global Access          Charles H. Green

Charlie will be a presenter in the 2010 Mediation Business Summit webinar. He’ll talk about how the sales process is a powerful opportunity to create trust and how behaving in the a trustworthy manner during the sales process both creates customer trust and enhances the odds of getting the sale. He’ll outline the principles of Trust-based Selling(r) and discuss how to respond to the Six Toughest Sales Questions. Cost: $100 to attend entire event 8 speakers, via telephone. For more information and to register, visit http://mediationbusinesssummit.com/register/.

Tues-Fri. Sept 21-24th          Chicago          Andrea Howe

Andrea Howe, Director of Learning Programs, will be a Learning Team Leader for Linkage Inc’s 2010 Best of Organizational Development Summit and will be leading a session on "Client Relationships: Making Yourself more Trustworthy."

Tues. Sept. 28th          Washington, DC          Andrea Howe & Charles H. Green

Save the date for Trusted Advisor Associates’ foundational, core two-day program Being a Trusted Advisor: Walking the Talk; co-led by Andrea Howe and Charles H. Green. For more information or to register, please contact Tracey Del Camp at [email protected].

Can They Build a Robot You’ll Trust?

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From the Boston Globe, read about Nexi the Robot, in an article suggesting the robot may “furnish a lesson in human trust.” Partly yes; and partly no.

I find two things interesting about it. First, 21 of the first 22 comments on the article are strongly negative. Second, the gist of what the scientists are finding accords very well with commonsense.

Here’s Nexi’s experiment:

By controlling how 4-foot-tall Nexi interacts with people, scientists have a new and powerful way to study the signals that allow people to trust one another, or not, within minutes of meeting.

“There should be some signal for trustworthiness that’s subtle and hard to find, but [it is] there,’’ said David DeSteno, a psychologist at Northeastern University and one leader of the experiment.

Nexi offers advantages over using a human participant because people give off subtle gestures, or engage in unintentional mimicry, that can be hard to measure or control, and probably influence whether someone trusts them.  Nexi has many of the expressive abilities of a person, but researchers can tightly control every aspect of her behavior — allowing them to test what nonverbal cues might make her seem more or less trustworthy…

…so far, researchers believe that perceiving trust is not merely a matter of one person projecting a shifty eye or some other untrustworthy vibe; instead it is a complicated interaction in which people may unconsciously mimic one another, and through their own motions learn something about the other person’s internal motivations.

Trust is About Relationship

It may sound trivially obvious, but trust is inherently about relationship. The way we establish trust is by interacting–and seeing how it feels. The mimicry referred to above is science-talk for whether we ‘get’ each other. 

Repeating a phrase, a gesture; it’s what shrinks do too, when they continually ask, “So, does that make you feel ___?” 

Some of you may recall an old computer game called Eliza; programmed in Basic or Fortran, it would announce itself to you as a therapist. It would solicit your input, then spit it back to you with a prefix phrase like, “So, how do you feel when you CHR$YourInputHere$.” (For a typical Eliza session, click here).   Basically, the program just repeats your phrases back to you; yet it gives us the feeling of being listened to.

Over at the NYTimes, another robot story; this one about Paro, a robot modeled after a baby harp seal: 

It trills and paddles when petted, blinks when the lights go up, opens its eyes at loud noises and yelps when handled roughly or held upside down. Two microprocessors under its artificial white fur adjust its behavior based on information from dozens of hidden sensors that monitor sound, light, temperature and touch. It perks up at the sound of its name, praise and, over time, the words it hears frequently.

It’s been successfully used as therapeutic for patients with dementia. It appears to work. No surprise there: it responds. Mimicry again—finding ourselves to be the cause of a reaction by another is essentially affirming. It means we matter. 

What’s Not Amazing About Robot Stories

I find there are two tones struck in most articles about this sort of subject. One is the idea that we have gotten “closer to explaining” some core element of humanity. The other is it’s somehow amazing to discover “how things really work.” As one economist in the Nexi study says, “What’s interesting to me is how mechanical the process of interacting with another being turns out to be.’’

Please. There’s nothing mysterious about it. 

Trust is about becoming related. So are friendship, sex, and politics. We can describe virtually any human activity in physical-chemical terms (see for example the oxytocin-trust effect); but that doesn’t imbue it with meaning, or ‘explain’ it, any more than saying adrenaline drove World War II.

So, people respond to robot baby seals or blue-eyed blinking machines. How is that different from children playing with dolls, men finding some mannequins attractive, people finding panda bears more attractive than snakes, finding one automated GPS voice more friendly than another, or forming very strong bonds with pets? Why do we give cars names, why do we anthropomorphize mice on TV, why was it a snake that Eve spoke to? Because they mimicked engagement with us. And we responded.

Can our feelings be manipulated by machines? Sure; it’s why Thomas the Tank Engine has a smile on his ‘face.’ And if a locomotive can cause us to smile, is it any wonder that a Bernie Madoff can cause us to part with our money?

Not really; our mechanics are quite simple. Knowing the “how” doesn’t take anything away from the mysterious “why” that will always be at the heart of wonder.

Constructive Hypocrisy and Trust

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A stimulating conversation over on LinkedIn, sparked by Adam Turteltaub of the Society of Corporate Compliance and Ethics, leads me to explore the relationship of hypocrisy to trust, authenticity and truth-telling.

How can there by such a thing as “constructive hypocrisy,” you ask? Well, it’s a good term to describe how we handle the uncomfortable no-man’s land between the letter of the law and the nuanced nature of the world.

Example: The 55 mph speed limit. Enforcement kicks in at about 65. We say “about” because it has to stay loose, else it becomes the new 55. How can you justify people driving 57 when the limit is 55? You can’t. But we do all the time. Constructive hypocrisy.

Bill Bennett wrote about constructive hypocrisy as key to social functioning back in the 90s.  The brilliant (and outrageously controversial) Herman Kahn used the term to describe the social value of plausible deniability (“A rural American man doesn’t want his daughter to be able to buy pornography at the corner store; and if she does, he wants to be able to say he didn’t know about it.”)

But we don’t need no stinkin’ highfalutin definitions. Here are two that’ll do fine. Have you ever said:

“I’ll call you right back in 1 minute.” Which means between 3 and 5 minutes.

“Let’s do lunch,” which of course means ‘let’s don’t do lunch.’

If you’ve said those things, then you’re a constructive hypocrite.  Sometimes, anyway. Congratulations.

The Role of Hypocrisy

Constructive hypocrisy gives us breathing room from the constant cacophonous confrontation between the puritanical rule-givers among us, and the anarchistic forces just waiting to destroy civilization. 

·    What does the flight attendant do when the announcement says ‘turn off your cell phones now’ and the passenger covers up the screen to finish the email? Constructive hypocrisy (for a while).

·    What does the cop say when it’s a first violation and the person is clearly not a trouble maker, and the violation was narrow? I’ll let you off this time with a warning….Constructive hypocrisy.

·    What are sentencing guidelines for judges, except constructive hypocrisy?

Here are some situations where the world could use more, not less, constructive hypocrisy:

·    Gay marriage

·    Three strikes you’re out sentencing rules

·    Abortion (oh boy, I can see the emails now)

·    the Middle East

On the other hand, there are limits to constructive hypocrisy—at some point it becomes denial. Think of US immigration policy, for example, or municipal pension funding. Over a decade ago, don’t ask/don’t tell was constructive hypocrisy; as time passed, it became uncomfortable denial. The policy didn’t change; society did.

 Hypocrisy, Authenticity and Trust

On the face of it, you’d think trust can’t co-exist with hypocrisy. But on closer examination, I think they are complementary, maybe even interdependent.

Constructive hypocrisy is a socially acceptable way of agreeing to disagree. We both choose to look the other way, rather than insist on a constant confrontation of values. Done in the right proportion, it is the triumph of relationship over principle.  

Can I trust someone who’s being hypocritical? In many cases, yes, precisely because their willingness to be hypocritical rather than provoke a confrontation over principle means they actually value my relationship over one of their opinions. 

What about authenticity? Only in a narrow sense are they in conflict. For me to indulge in constructive hypocrisy doesn’t mean I’m being inauthentic about my beliefs; it means I’m being authentic about the balance of my principles and the need to get along with others in the world. 

Alfred Hitchcock knew that imagination trumped vision (the shower scene in Psycho); other directors know that a bit of clothing is more erotic than pure nudity.  In the same sense, a bit of hypocrisy lubricates social interactions better than does undiluted truth.  

If you’d like to talk more about this concept, maybe we could do lunch?  

Trust Capital

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Sometimes we in business think of trust as a soft skill. A nice-to-have at best, a wussy distraction at worst, compared to the ‘hard’ realities of the competitive, market-driven bottom line out there.

Nothing could be further from the truth.

The truth is, trust is the most fundamental form of capital. 

There is of course financial capital: the retained earnings on the balance sheet, the asset strength, the bond ratings you earn. But financial capital is just an end result of other forms of capital.

Brand equity, for instance. Or human capital. Or customer loyalty. Or your company’s reputation. Now those, many people would say, are the true sources of capital.

Yet, think again. 

·      Brand equity minus trust is just name recognition.

·      Human capital without trust is mere contract labor.

·      Customer loyalty absent trust is no more than convenience.

·      Reputation without trust is just notoriety.

Trust isn’t incidental to capitalism, it’s the key ingredient. Capitalism without trust is just a floating flea market at best, a weakly regulated casino at worst.  

Soft skills? Wussy? Not if you’re interested in the creation of long-term economic and social well-being.

Loyalty Programs Shoot Selves in Foot

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I have for some years now followed a UK newsletter called the Wise Marketer, which does a pretty thorough job (or so it seems to me) of covering the world of loyalty programs. 

Loyalty programs are generally thought of as having been invented in the 1970s by the airlines (particularly American Airlines, I believe—someone confirm?). They have always had a dual purpose: to reward and encourage exclusive buying behavior, and to provide a source of data about buying behavior.

They have also generated a new approach to marketing, one aimed at tapping a latent desire for status among many consumers. An anthropologist would be fascinated by the psychology and behaviors of, say, management consultants around the airport gates and airline clubs. Certainly companies have spent a great deal of money on these programs, trying to make their program distinct in their ability to confer status and prestige.

So this paragraph in the most recent newsletter made me raise my eyebrows:

Clearly, the loyalty market has reached a state of maturity in the airline, hotel and car rental industries, with very few such loyalty programmes today being able to claim genuine competitive differentiation. Simply matching the proposition offered by the competition is not enough to create lasting customer loyalty. When all programmes within a sector are basically the same (e.g. they all have online enrolment, an award chart, a welcome bonus, double miles promotions, and so on), customers tend to react with indifference. 

This isn’t really new; I remember hearing ‘customer loyalty in the airline business is about 20 minutes,’ 15 years ago. But it’s jarring nonetheless, because if one of the primary purposes of a marketing program is to differentiate the company, and the net result of several decades of that program is to eliminate differentiation among the companies—well, that’s a marketing poster child case for foot-shooting, isn’t it?

Michael Porter pointed out something similar years ago: the tendency to seek out industry ‘best practices’ is anti-strategic. That’s because even if the practice is ‘best,’ if everyone does it—then no one is strategically different. And part of the essence of strategy is to be distinct.

I’m a little bemused by all this, because the term ‘loyalty’ has long been abused in business. ‘Loyalty’ implies an intensely personal relationship, and what ‘loyalty programs’ have devolved to is anything but personal.

Ironically, the one thing in today’s business world that truly is differentiable is also that which is truly personal. You can copy someone else’s programs, policies and procedures—but you can’t copy their relationships. Those are sui generis, unique. 

Back in the early 1990s one of the truly prescient business books of our time was published: The One to One Future, by Don Peppers and Martha Rogers. It made the very sound observation that technology would allow us to combine scale and customization, at the individual human level. Market segmentation would max out—at a one-to-one level.

I remember being very excited to hear that insight. This was around the same time that Loyalty was being talked about by Fred Reichheld and people at Harvard Business School. Connecting the dots back then would have suggested that the way to successful companies would be to create great relationships, which then resulted in loyal feelings, behavior, etc.

What’s happened, of course, is not that at all. We have succeeded instead in publicizing the private, trivializing the profound, and pretty much turning the potential of one-to-one relationships into a cacophony of mechanical, status-climbing must-haves. Think platinum cards, ring-tones, ‘how’m-I’-doing’ online CSR surveys. 

The irony is: at a time when every loyalty program looks alike, when ‘personal’ service is mechanized, and when everyone is a VIP—that’s the very time at which truly personal, one-to-one relationships really stand out. They are even more differentiable than ever, because most companies have forgotten what that really means.

Dare to be real. You might be shocked to find out how much your customers like it.